SURAT (Commodity Online): Surat, the biggest diamond polishing centre in the world in India, is facing a peculiar problem of shortage of diamond roughs.

Reason for this is that diamond mining companies are holding back rough diamond supply in an attempt to maintain price levels. The rough prices have registered hike of almost 30 per cent since March 2009.

Surat has been recovering from the recession impact during the past few months with new orders from China and other nations flooding the Surat diamond units

However, now most of the diamond mining companies, including De Beers, BHP Billiton, Rio Tinto and Alrosa, decreased the rough diamond production following the economic downturn in 2008. In the first quarter of 2009, De Beers alone had reported a 90 per cent cut in rough diamond production.

This led to shortage of rough diamonds and with demand outstripping the supply, the diamantaires are finding it tough to adjust to the volatility in the prices of rough diamonds.

Market observers expressed concern over the prices of rough diamonds that increased consistently since March 2009 even as polished diamonds prices remained unchanged.

The rough diamonds brought from Russia’s Alrosa mine at equally high levels have dispelled expectations that the Russian supplier may dump stockpiled goods in the market at discounted rates.

Since March 2009, the De Beers Diamond Trading Company (DTC) raised the prices of rough diamonds between 5 and 10 per cent. DTC’s Indian sightholders noted that the smaller rough that are supplied to the Indian market was most affected, while prices on other rough increased between 3 per cent to 7 per cent.